"Kitco" is a familiar name to many people who visit our world-famous, award-winning website www.kitco.com. With its compelling combination of an online precious metals store, live spot prices, expert market commentaries, up-to-the-minute news and usable market information, our website attracts nearly a million visits every day.
Kitco Metals Inc. is also one of the world's premier retailers of precious metals and a leading supplier of refining services, labware for mineral analysis and precision-crafted devices for high-technology manufacturing processes.

(Kitco News) – Large speculators scaled back on their bullish positions in gold and added some bearish ones after Ukrainian tensions eased and comments from the Federal Reserve were construed as hawkish, analysts said.

The most recent data compiled by the Commodity Futures Trading Commission shows that large speculators cut their gold net-long position in the “legacy” report by 15% during the reporting week to March 25. They cut their net long in the “disaggregated” report by 13%.

Comex June gold tumbled by $47.70 to $1,311.40 an ounce during the week covered by the latest CFTC report. May silver fell 88.3 cents to $19.979 as of March 25, while Nymex July platinum fell by $40.40 to $1,422.60.

Meanwhile, June palladium rose by $18 for the week to March 25 to settle at $789.40. Comex May copper added 5.4 cents to $3.0055 a pound.

Net long or short positioning in the CFTC data reflect the difference between the total number of bullish and bearish contracts. Traders monitor the data to gauge the general mood of speculators, although excessively high or low numbers are viewed by many as contrarian signs of overbought or oversold markets that may be ripe for price corrections.

The CFTC releases both a “legacy” and “disaggregated” report for each commodity, with the latter meant to provide more detail but having a shorter history for comparison purposes since it was started only five years ago.

HSBC pointed out that the net long in gold finally fell after rising sharply over the prior 12 weeks.

“This may be due to investor profit taking from the fallout of the Crimea referendum to join Russia,” HSBC said.

Additionally, TD Securities said those speculators who wanted to establish short positions became more aggressive after the FOMC turned more “hawkish” than expected in a meeting that wound up on March 19.

At the time, gold fell, with traders saying the market was spooked when forecasts from individual Fed members suggested they collectively anticipate the federal funds rate rising from currently near zero to 1% by the end of 2015. Traders also said that Chair Janet Yellen’s remarks during a press conference led to an outlook that monetary tightening could start roughly six months after the end of the bond-buying program known as quantitative easing.

In the disaggregated report, the net long in futures and options among money managers had risen to 138,429 as of March 18 from 28,702 on Christmas Eve, a 12-week gain of 380%. In the most recent reporting week to March 25, however, the net length fell back to 120,042 lots as these accounts cut their total longs (bullish positions) by 14,708 lots, while adding to their total shorts (bearish bets) by 3,679.

In the legacy report, the net long of the large non-commercial accounts – commonly referred to as the funds — had soared to 172,204 as of March 18 from 54,587 on Christmas Eve, a gain of 215%. But in the latest week to March 25, this net length fell back to 145,531 as non-commercials cut total longs by 18,253 while adding 8,420 gross short positions.

“The aggressive and persistent increase in gold speculative length over the last two months made the market increasingly vulnerable for a washout,” UBSUBS said. “The hawkish tilt from the FOMC combined with easing safe-haven demand gave longs enough reason to cut back positions. Interestingly though, the correction has been relatively orderly and interest to buy the dip is evident. This reflects the underlying improvement in sentiment towards gold – investors are acknowledging the value of holding gold to diversify portfolios and insure against tail risks and are therefore looking for opportunities to get in at better levels.”

Still, UBS added, considering net length in gold rose by more than 200% from the beginning of the year through mid-March, the decline last week may not be enough to eliminate all of the speculative “froth” in the market.

Silver net length fell mainly because of more short positions, although there was also some long liquidation. Money managers scaled back their net length to 9,580 lots from 18,239. They cut total longs by 1,691 lots and added to their shorts by 6,968.

The non-commercials cut their net long in silver to 15,680 from 23,057. These accounts liquidated 1,087 total longs while adding 6,290 shorts.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.